Bitcoin is an astonishing invention. Blame or praise it, the issue bewilders and puzzles. We, humans, fear the unknown, yet our enormous curiosity overcomes our blind fear.
Indeed, a new thing may sting (a reasonable precaution shall apply). Before trying, we need to explore. Perhaps, the findings will tell us better keep out of the discovery. On the other hand, labeling novelty a faulty before exposing it to a proper examination betrays a coward. It is like retreating at any encounter, but very few are really worth escaping.
Back in 2014, the opinion makers rushed headlong one by one to conclude that Bitcoin would be just digital collectibles and not real money, and leveraged such like catchy wordings. Those definitions proved to be superstitions. It sounds rather an attempt to run away without grasping actual opportunities and maybe threats.
Everyone can learn from Wikipedia that Bitcoin circulation started at the very beginning of 2009. It took a couple of years for the digital newcomer to lift its rate of exchange to fiat currencies a thousand times. At such a fertile background, many invested into Bitcoin considering it a high-risk, high-profit option. The fairy tale seemed to arrive at its gloomy end in 2012 as Mt. Gox, Japanese stock exchange collapsed. A number of reputable publishers observed the wreckage was due to the vulnerabilities inherent in the Blockchain currency, Bitcoin, that the Mt. Gox focused on. Forbes, CNBS were among top critics. Their observers had to explain the collapsing currency. It seemed to be an easy prey. The weapon selected betrayed the hunters, though: it became obvious their articles aimed at justifying common superstitions instead of clarifying a real state of affairs.
Awkward though the Bitcoin 2014 criticism was, it revealed a number of myths about the controversial invention. The most outrageous one came from Forbes contributor Louis Woodhill. His statement was that Bitcoin number would be too much restricted. Any economic system cannot survive with 21 million monetary units only. A direct speech follows: ‘It is simply a fact that there will never be enough Bitcoins to use as a substitute for the dollar.'
This argument appeared in Forbes publication titled ‘Bitcoins Are Digital Collectibles, Not Real Money.' ‘Opinions expressed by Forbes Contributors are their own.’ – The disclaimer under its title is worth quoting. True, Bitcoin system can – and almost certainly will – have 21 million Bitcoins only. By design, it is to reach the ultimate high by the middle of next century. That number is pretty insufficient. But behold! The critics would tell Bitcoins are not real money, ‘…you know, they don't really exist’.
In a way, they are right. You will not find a Bitcoin like a dollar printed on a piece of paper. The Bitcoins exist on the Blockchain, and a single Bitcoin consists of 108 (100 million) Satoshi, elementary, unbreakable units. It is fair to say there are already enough Satoshi for any kind and number of transaction in any global and national economy.
The U.S. monetary base is currently 3,869,723,000,000. A single Bitcoin contains 100 million satoshi. Bitcoins in circulation, according to blockchain.info, are soon to break the threshold of 16 million. To see how many Satoshi that would make, simply add eight nulls at the end: 1,600,000,000,000,000 Satoshi. Compare that to USD 3,869,723,000,000.
That is far more than the amount of USD released – approximately, in 500 times. OK, one may observe one dollar consists of 100 cents, while Satoshi is the elementary unit, like a single cent.
There is something called Bit or Microbitcoin. It relates to Satoshi just like 1 dollar to 1 cent. The amount of bits in circulation is 16,000,000,000,000 MicroBTC vs. 3,869,723,000,000 USD.
As you can see, that is still four times more that a number of dollars are released. Remarkably, the design of Bitcoins provides for the monetary base comparable to the U.S. and worldwide monetary base. In the long run, that might actually fail to satisfy the needs of worlds' economy. So far, U.S. economy survives with a monetary base four times less than a number of Bitcoins mined so far.
Perhaps, it is better to compare the number of Bitcoins released with the U.S. monetary base, for actually the above amount of MicroBTC represents a total supply of the virtual currency. In that case, the outcome indicates incredible equivalence: current U.S. dollar money base is circa 12,807 USD billion, compare that against 16,000 MicroBTC. There is hardly any doubt that the first decentralized currency developers adjusted the number of monetary units against real economy benchmarks.
Resources:
David Balaban is a computer security researcher with over 15 years of experience in malware analysis and antivirus software evaluation. David runs the Privacy-PC.com project which presents expert opinions on the contemporary information security matters, including social engineering, penetration testing, threat intelligence, online privacy and white hat hacking.